ResearchFARM. Convenience store 2020 Centre of the local ecosystem

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1 Convenience store 2020 Centre of e local ecosystem The grow opportunity in establishing a hub protecting e investment into physical locations ResearchFARM INCLUDED: Access to our online database wi 500+ pictures November 2012

2 CONVENIENCE 2012: CENTRE OF THE LOCAL ECOSYSTEM We have identified 5 issues at will be crucial to e convenience store format in Today s convenience store retailers should start to... establish an ecosystem around e store, become completely catchment-centric (shopper and location), integrate eir offer by maximising e private label opportunity, leverage e c-store in e supply chain and update e food service offers...to remain relevant in e future. Businesses covered include: Ahold, Amazon, Apple, Asda, Boots, Budgens, Carrefour, Casino, Circle K, Coop Suisse, collect+, Coop Deutschland, Coop UK, Costa, Delhaize, DHL, dm, Duanne Reade, Edeka, E.Leclerc, FamilyMart, Febo, Franprix, Hubiz, Kiala, Lawson, Lidl, Migros, Monoprix, Morrison, Rewe, Rossmann, Sourced Market, Spar, Starbucks, SuperBest, Tesco, Waitrose, 7-Eleven The report provides global best practice examples from e EU, US, Hong Kong and Japan and features exclusive access to our convenience store picture library.

3 RETURN ON INVESTMENT This report will allow you... demonstrate how to protect e investment into bricks and mortar by using e convenience store as an ecosystem centre tell you what convenience shoppers are looking for in future help you to mitigate risk, minimise nasty surprises and shocks show you where e grow spots are and how to exploit em highlight innovative ideas at should not be missed and ose at probably won t work too well help you to learn from e mistakes of oers - what missteps to avoid and what successes to copy explain current best practise to benchmark your own performance against e best in e business

4 KEY QUESTIONS ANSWERED Among e various convenience types, which is e fastest growing convenience location? Petrol stations? Neighbourhood stores or travel hubs? And what is e reason for is rapid grow? Moreover, will it continue? What are e risks? What do Japanese convenience operators do really well? What can all oers learn from eir innovations? Which risks have ey mitigated at will affect e rest of e world over years to come? Which is more important for a convenience store operator? Catchment centricity? Shopper centricity? Or location centricity? What are e low hanging fruit in terms of supply chain optimisation around convenience stores? Especially in terms of multichannel integration? What about travel hub locations? What will happen over e next 5 years - especially at e multichannel, multi-format retail giants? How can ey utilise e convenience store as part of eir customer centric supply chain? Where will convenience concepts go over e next 5 years? What trend crossovers can we expect from self check outs? Will shopping become even more automated and if so how? Is food service always e best option to generate grow for convenience operators? What are e drawbacks? Should convenience stores become cafes as well? Is fast casual e way forward? What effect have gas price rises on e different convenience store locations? Which location benefits, which does worst? And what can be done about is? How can convenience store operators establish an ecosystem and walled garden around eir stores? Which EU, Asian and US convenience store retailers already have best practice concepts up and running? Who is operating totally integrated, holistic solutions from store location to private label proposition to time sensitive stock management and offers? What can be learnt from em? Why is click & collect e perfect addition to convenience? How can lockers work for a big basket shop and how can ey extend opening hours? Should ese lockers be in e store or raer on e outside accessible 24/7? What is best practice in community retailing in convenience stores? How can convenience store retailers become totally embedded and immersive and generate community based loyalty? Who is e outstanding player in is respect? What are e big risks and reats to e current convenience store model? What can convenience store operators do about encroachment from discounters and drug stores and from regulatory creep?

5 TABLE OF CONTENTS (1/5) Executive summary Context Definitions, Sizes in 2012 Definition: Convenience store of e future Convenience stores: 6 background drivers, category management Convenience stores: EU 27, 2011, store numbers data per country Convenience stores: about e sizes and definitions I Grocery sizes: EU 27, in 000 bn Grocery sizes: shoppers cut back, shop around, trade down and go to hard discounters Grocery sizes: EU 27, grow in %, CAGR Convenience stores: EU 27, 2011, sales per country, % of total grocery, sales per store Convenience stores: about e sizes and definitions II Creating an ecosystem around e convenience store Convenience stores: stores as ecosystems, heart of infrastructure, sharing footfall Convenience stores: multichannel hubs, from pulling in click & collect to pushing out QR The model: stores as ecosystems and multichannel hubs The oer meaning of ecosystem: taking a leaf out of Apple s and Amazon s book The oer meaning of ecosystem: creating a walled garden around convenience Click & collect: e footfall driver Click & collect: Waitrose s locker system plans, 24hr access Click & collect: Waitrose splitting e mundane from e aspirational shop Click & collect: Asda trialling drives, Tesco s dark store development Click & collect: Tesco pushing out grocery click & collect Click & collect: collect+ facilitating partnerships between retailers and convenience stores p14 p22 p23 p24 p25 p26 p27 p28 p29 p30 p31 p33 p34 p35 p36 p37 p38 p39 p40 p41 p42 p43 p44

6 TABLE OF CONTENTS (2/5) Case example: Amazon s lockers, e co-op cooperation Consumers: every second online shoppers wants click & collect, 4 key drivers Click & collect: determining store location, cost benefit, plan trip around click & collect Click & collect: upselling, smartphones, click & collect for convenience grocery Future of convenience: Carrefour s Mon Panier, convenience click & collect and apps Future of convenience: e-convenience Extended aisle: QR code walls and Augmented Reality Extended aisle: from pulling in footfall to pushing it on to e net Extended aisle: Tesco, John Lewis convenience Extended aisle: Delhaize, Superbest, Coop Zürich convenience Extended aisle: Budnikowsky Actionable recommendations: QR code walls Actionable recommendations: Marketing mix, call to action, from QR to AR AR: No regulations yet, targeting venues, ultimate show rooming, governance issue in store p QR code walls: Recommendations Catchment centricity: Localising Convenience Localising convenience: know your customer Localising convenience: Tailoring to particular demographics, Casino, 7-Eleven, Co-op Localising convenience: Adapting offer to local market and shopper, Casino, Carrefour Localising convenience: Adapting for an older generation e case of Japan Localising convenience: Adapting for an older generation 7-Eleven & Toyota collaboration Localising convenience: Adapting for an older generation FamilyMart Localising convenience: Duane Reade - Reinventing e traditional US drugstore p45 p46 p47 p48 p49 p50 p51 p52 p53 p54 p55 p56 p57 p58 p59 p60 p61 p62 p63 p64 p65 p66 p67

7 TABLE OF CONTENTS (3/5) Localising convenience: Duane Reade - for a modern consumer city Actionable recommendations: Focus on people and place Catchment centricity: Travel hubs e fastest growing convenience location Travel hubs: A lucrative location for convenience stores Background drivers: guaranteed and high quality footfall, at least twice a day Background drivers: higher standards, logistics advantage, easier to open small outlets Travel hubs case examples: Sourced Market, London St. Pancras Travel hubs case examples: Sourced Market, London St. Pancras, 10k customer per week Travel hubs case examples: Hubiz, Paris, swivelling a time sensitive proposition Travel hubs case examples: Hubiz Paris, stock rotation Travel hubs: Casino and Monoprix bringing everyday convenience to train stations Travel hubs: Monop station, offering laundry services Actionable recommendations: Travel hub convenience 1/2 Actionable recommendations: Travel hub convenience 2/2 Joined up inking: Private Label & Convenience Convenience: integration of location, format and private label range Migros & Migrolino: dedicated convenience private label line, numbered SKUs Convenience: shopping as fast and easy as possible, Morrisons foodie credentials Duanne Reade: PL relaunch shifting perception from drugstore to convenience Ahold: e comprehensive solution, AH Express line, ranges tailored to time of day Ahold: AH to go - expansion into Germany, support from across e border Ahold: AH to go - e start of an European wide expansion strategy Actionable recommendations: convenience private label strategy Community & e environment: Thornton s Budgens Thornton s Budgens: driving down carbon footprint, Box of hope, community sourcing p68 p69 p70 p71 p72 p73 p74 p75 p76 p77 p78 p79 p80 p81 p82 p83 p84 p85 p86 p89 p90 p91 p92 p93 p94

8 TABLE OF CONTENTS (4/5) Thornton s Budgens: local sourcing, supply partnerships, beating e competition Thornton s Budgens: in store chef, charity links, food from e sky Private label strategy & local issue Local and regional: e drivers, perfect opportunity for private label Local and regional: traceability and QR codes, engaging shoppers Carrefour: Reflets de France, halo effect for Carrefour s private label, key loyalty driver Local and regional: Casino, E.Leclerc, Edeka, Coop eg Local and regional: visual merchandising crucial for on shelf visibility Vertical integration: Zara-ising grocery, secure supply, margin and supply chain control Vertical integration: reat from FMCG forward integration, lean supply chains Actionable recommendations: vertical integration and regional lines Integrating e C store into e supply chain: fulfillment opportunities Supply chain integration: Morrisons, Casino and Cdiscount Supply chain integration: using e physical c-location as a hub to drive down costs Innovative delivery systems in urban areas: Casino Group s river delivery system in Paris Innovative delivery systems in urban areas: Casino s sustainable logistics Innovative delivery systems in urban areas: Franprix s reduced CO2 footprint The food service opportunity Food service: moving towards coffee shops, difficult proposition Convenience stores: Capitalising on e ird place opportunity Convenience stores: Congenial environments, fast casual dining Chez Jean: Casino & Relay cooperation, Daily Monop innovative space saving solutions Circle K: attract target customers and make em regulars p95 p96 p97 p98 p99 p100 p101 p102 p103 p104 p105 p106 p107 p108 p109 p110 p111 p112 p113 p114 p115 p116 p117

9 TABLE OF CONTENTS (5/5) Food service: Rewe to go, difficult German market, bakeries and petrol station saturation Actionable recommendations: food service and ird space Threats to e model: Threats to e model: e 3 different effects of rising gas prices Threats to e model: changing car usage and travel patterns Threats to e model: hard discounters & drugstores, Boots, Duanne Reade, dm, Rossmann Threats to e model: regulations and heal legislation, e tobacco impact The reat: Hard discounters, Lidl s new fascia Lidl: revamping e store format towards a convenience fascia, focus on fresh and food Lidl: low branded SKU count, e cash desk innovation Lidl: drawbacks of e new model, analysis, cost drivers, space considerations Lidl: private label segmentation and vertical integration as key strategic objective Lidl: vertical integration achieved in soft drinks, WIP in confectionery, e PET system Future of convenience: Beyond e realms of e traditional store Convenience store of e future: mobility, vending and e-convenience Future of convenience: Mobile c-stores, Japan s convenience-on-wheels concept Future of convenience: Benefits of convenience store on wheels concept Future of convenience: The rise of e vending machines, Costa Express, Febo Sources p118 p119 p120 p121 p122 p123 p124 p125 p126 p127 p128 p129 p130 p131 p132 p133 p134 p135 p137 Claim your 15% discount to a Retail Bulletin conference of your choice by quoting "ResearchFarm" when you book your place. Multichannel Retailing Summit 6 February 2013 International Expansion Summit 26 March 2103 InStore Engagement Conference 7 May 2013 Customer Loyalty Conference 12 June 2013 Payments Summit 19 June 2013 Loss Prevention Summit 10 September 2013 Mobile Retailing Summit 24 September 2013 Retail HR Summit 8 October 2013

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11 SAMPLE PAGES Zoom in to read Convenience stores: Stores as ecosystems, heart of infrastructure, sharing footfall The phenomenon of ecosystems is important in two different ways. In nature, in e great oceans, masses of water see very little activity and life, apart from e occasional fish swimming rough. Then in oer parts such as e space on and around a coral reef, exponential grow of life forms takes place wi a multitude of species cohabitating, resulting in rich biodiversity all crammed into e tight confines of an ecosystem. Retailers should conceptualise convenience stores as an ecosystem in high footfall locations. This approach will ensure at retailers will make e store work to its best abilities and at e investment into real estate, business rates and staff will count and generate a return. Seating e store at e heart and centre of an ecosystem will enable oer services to ride on e back of e footfall and infrastructure created by e store. By ese service provisions we mean anying from click & collect The oer meaning of ecosystem: creating a walled garden partnerships to legal, banking, foodservice and pharmacies services to extended range (in digital form) and to yet unknown technological breakrough innovation at ties smartphones and shoppers to physical locations. Offering click & collect capabilities makes eminent sense for convenience operators as a footfall driver. The benefits of being able to collect an ordered item at a time convenient to e shopper (i.e. after work, during lunch etc) and in e shopper s vicinity are obvious, driving retailers to partner wi convenience operators in e neighbourhood rough a ird part player such as collect+ in e UK or Kiala in France or DHL in Germany. 34 ResearchFarm - Retail Analysts No part of is report may be reprinted or reproduced in any way wiout e written permission of ResearchFarm. 38 ResearchFarm - Retail Analysts No part of is report may be reprinted or reproduced in any way wiout e written permission of ResearchFarm.

12 SAMPLE PAGES Zoom in to read Localising convenience: Adapting for an older generation 7-Eleven & Toyota collaboration 7-Eleven in Japan tied up wi Toyota Motor Corporation to enable its staff to deliver customer orders, eier made over e phone or in store to eir houses by Toyota mini-electric vehicles. According to 7-Eleven e company has managed to significantly boost its customer numbers among older consumers by offering is type of delivery service. Despite e convenience chain being perceived by shoppers as mainly catering to younger consumers, over 50s now account for 30% of its customer base, compared to 12% for under 20s. Duanne Reade: PL relaunch shifting perception from drugstore to convenience 65 ResearchFarm - Retail Analysts No part of is report may be reprinted or reproduced in any way wiout e written permission of ResearchFarm. Private label redesigned and repositioned to suit wider revamping efforts around store environments The experience of Duane Reade goes to show at private label strategy plays an integral role in e rebranding and revamping process on e wider store level. In order to create a holistic image for e company, it is vital to acknowledge e importance of its private label positioning in rebranding efforts. By redesigning and revamping its private label in conjunction wi wider refurbishments and repositioning of its stores around its New York Living Made Easy corporate initiative, Duane Reade has reaped e benefits of its turn around strategy, not just rough a doubling of private label sales but also a more positive perception of e retailer among its target customer base in e city. 88 ResearchFarm - Retail Analysts No part of is report may be reprinted or reproduced in any way wiout e written permission of ResearchFarm.

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